Millennials have made up a substantial portion of homebuyers in recent years and based on the 2018 Mortgage Consumer Survey, they continue to do so, representing just under 49% of first-time buyers. Although this is a decrease from 60% in 2017 and 58% in 2016, Millennials continue to impact and alter the homebuying and mortgage process.
What does the typical first-time buyer look like? Almost half (40%) are married, 80% are employed full-time and about one-quarter (26%) have a household income between $60,000 and $90,000. A strong percentage of them were born outside of Canada, with 22% identifying as newcomers to Canada. Mortgage professionals can help meet the unique needs of newcomers with the support of CMHC’s homebuying information which is available in different languages.
The top two reasons first-time buyers bought a home: they wanted to get a first home and they felt financially ready. Although certain urban markets continue to exhibit high house prices and other barriers to entry, the survey found that 61% of first-time buyers bought a single-detached home. In fact, single-detached home was the top housing type purchased in all regions across Canada, except in B.C. where condominium apartment was the most popular housing type.
The majority (85%) of first-time buyers spent the most they could afford on their home, compared to 68% of repeat buyers. This indicates that first-time buyers, including Millennials, may be stretching themselves financially to purchase their home. When it comes to the down payment, savings from outside an RRSP was the main source for first-time buyers. This suggest there is an opportunity to further educate first-time buyers about other options to help fund their down payment, such as the Government of Canada’s Home Buyers’ Plan (HBP).
To get aid with the mortgage process, first-time buyers contacted, on average, 2 brokers and 3 lenders. First-time buyer satisfaction levels with mortgage brokers and lenders remains high. However, mortgage professionals could further increase satisfaction levels by conducting more post-transaction follow-up and by providing clients with more information on closing costs, house purchase fees, interest rates, and steps involved in buying a home. CMHC’s Step by Step guide is a valuable tool for mortgage professionals to share with homebuyers to ensure they feel confident throughout the entire homebuying process.